Tax Evasion and Inequality∗ Annette Alstadsæter (Norwegian University of Life Sciences) Niels Johannesen (University of Copenhagen and CEBI) Gabriel Zucman (UC Berkeley and NBER) October 23, 2018 Abstract Drawing on a unique dataset of leaked customer lists from offshore financial institutions matched to administrative wealth records in Scandinavia, we show that offshore tax evasion is highly concentrated among the rich. The skewed distribution of offshore wealth implies high rates of tax evasion at the top: we find that the 0.01% richest households evade about 25% of their taxes. By contrast, tax evasion detected in stratified random tax audits is less than 5% throughout the distribution. Top wealth shares increase substantially when accounting for unreported assets, highlighting the importance of factoring in tax evasion to properly measure inequality. ∗Annette Alstadsæter:
[email protected]; Niels Johannesen:
[email protected]; Gabriel Zucman:
[email protected]. This paper is supplemented by an Online Appendix available at http://gabriel-zucman.eu/leaks. We thank the Scandinavian tax administrations (Skatteetaten, Skattever- ket, and SKAT), Statistics Sweden, and SVT Uppdrag granskning for their goodwill and cooperation; Sigurd Bjørnestad, Joachim Dyfvermark, Linda Larsson Kakuli, Fredrik Laurin, Petter Lundberg, Søren Pedersen, Gard Thomassen, and UiO Services for Sensitive Data (TSD) for exceptionally valuable assistance; Alan Auerbach, Brooke Harrington, Send Jonas, Patrick Kline, Adair Morse, Daniel Reck, Emmanuel Saez, Joel Slemrod, Daniel Waldenstr¨omand numerous seminar and conference participants for helpful comments and reactions. We are grateful for financial support from the Nordic Tax Research Council and the FRIPRO-program of the Research Council of Norway.